Life science VC up, but investment slows overall

The life sciences sector once again received the largest slice of US venture capital investment in Q2 of 2004, according to a survey of the professional venture capital community. Investments in the sector amounted to US$1.26 billion -- 29 per cent of all venture capital invested.

A total of 127 biotechnology and medical devices companies received funding during the quarter. Life science companies have now dominated the past nine consecutive quarterly surveys, and investment continues to remain near historical highs.

The Moneytree survey, by PricewaterhouseCoopers, Thomson Venture Economics and the National Venture Capital Association, found that venture capital investing overall slipped from to US$4.3 billion this quarter from $5.9 billion in the previous quarter.

However, investment was on par with the third quarter last year, when $4.3 billion was also raised.

For the first nine months of 2004, venture capital investments totalled $15.3 billion compared to $13.3 billion for the first nine months of 2003. At the current pace, full year 2004 is expected to exceed 2003's total of $18.7 billion.

Average funding per company was $4.6 million.

"We see a market that is seeking its natural level," said Tracy Lefteroff, global managing partner of the venture capital practice at PricewaterhouseCoopers. "There is a balance between earlier and later-stage investing. There is a natural mix of industry segments based on market opportunities, and a balance between risk and reward for venture capitalists and entrepreneurs alike."